Ethical Dilemmas in Accounting: Case Studies and Solutions

The accounting industry relies heavily on ethics because accountants are in charge of upholding the accuracy of financial data and ensuring that companies follow moral guidelines. Like many other nations, Australia is hardly an exception regarding accountants facing moral problems that require serious thought and moral judgment. 

This blog will examine several actual accounting assignment case studies of moral problems in Australian accounting. This will also offer suggestions that can assist experts in resolving these challenging circumstances.

The following solutions in each case study place a high priority on adherence to Australian laws, ethical standards, and professional integrity. You can find these types of accounting assignment solution at Auditors must remember that they are not the only ones who must make moral decisions. 

To help them through difficult circumstances, professional associations such as CPA Australia and Chartered Accountants Australia and New Zealand can provide advice if you pay for assignment.

Case Study No. 1: Innovative Bookkeeping

The dilemma: The management of a publicly traded corporation is pressuring auditors to falsify financial figures to demonstrate larger profits. The auditor knows this creative accounting is immoral and might amiss regulators and investors.

Solution: In this case, the auditor should put moral values ahead of managerial pressure. Instead of engaging in innovative techniques, they ought to voice their concerns to the CFO, an ethics committee, or other higher-ranking officials inside the company. To facilitate additional research, they should consider bringing the matter to the attention of the Australian Prudential Regulation Authority (APRA) or the Australian Securities and Investments Commission (ASIC).

See also  Is Technology the Future of Senior Care? Exploring the Benefits and Limitations

Case Study No. 2: Competing Interests

The dilemma: A customer of a chartered accountant is a partner in a business endeavour with a close friend. To drastically lower their tax obligation, the client requests the accountant to establish a favourable business appraisal for taxation.

Resolution: The auditor has a blatant conflict of interest in this situation. Their independence and integrity as professionals ought to come first. The accountant should tell the client that it is against their professional code of conduct to provide a biased appraisal to uphold ethical standards. The accountant should also recommend obtaining an independent value from a different company to guarantee fairness and adherence to tax laws.

Case Study 3: Confidentiality of the Client

The Solution: An auditor assists a customer who has participated in improper financial activities. Sensitive information about these inconsistencies, including possible tax evasion, is disclosed by the customer.

Solution: Accountants in Australia are subject to stringent secrecy regulations in addition to their ethical duties. In this situation, the auditor ought to stress to the client the value of abiding by the law and the possible moral and legal ramifications of tax evasion. If necessary by law, the accountant must obtain the client’s consent before disclosing any private information to the authorities. Alternatively, they can advise the client to make the necessary voluntary corrections and, if needed, seek legal assistance.

Case Study 4: The Independence of Audits

The dilemma: An auditor is tasked with examining the financial records of a business in which they own stock. The auditor worries that their ownership stake in the business could taint their impartiality and independence when conducting the audit.

See also  How to Check a PCB with a Multimeter

Solution: The auditor should immediately declare their ownership stake to their firm and the company they are auditing to uphold audit independence and ethical standards. After that, the company might evaluate the circumstances and, if required, designate a different auditor for the assignment. In these situations, transparency is essential to prevent the appearance of bias or conflicts of interest.

Parting thoughts,

The accounting industry is rife with moral problems, and Australian accountants encounter many difficult circumstances. However, upholding ethical integrity is essential for the stability and credibility of the financial sector as a whole, as well as for the reputation of individual accountants.